Ten reasons to give more consideration to employee referrals

Not having to wade through a mess of applications is great. But are referrals always the best choice?

Contributed to The Globe and Mail

Published February 20, 2015Updated March 25, 2017

For this Q&A, we asked employers: How much weight do you give to personal referrals when recruiting new employees, and why?

1. Personal referrals are king

We hardly hire without a personal referral any more. Sure, it's great to have some previous knowledge, but what we've found is people don't want to let down the person who referred them, so they work extra hard. By no means is it all we base our decisions on, but it's a big part of it. It also helps that we're approaching 100 employees, so our potential pool of referrals is large. -Andrew Howlett, Rain

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2. Referrals aren't everything

A personal referral is great, but the new employee needs to be qualified to do the job. Far too often I see people hire new employees because of personal relationships and referrals who simply can't do the job they were hired to do. New employees should be considered because of what they can bring to the table, not because of who they know. -Andrew Saladino, Just Bath Vanities

3. I rely heavily on referrals

I've built my success on networking, which means that I rely on my reputation as well as others' reputations to grow. So, when hiring, I rely heavily on referrals from within my network who know me and my company and who wouldn't want to refer someone unless it's a person they can put their personal stamp of approval on. -Darrah Brustein, Network, Under 40 / Finance Whiz Kids

4. Referrals get you interviews

Since I work in the staffing industry, I often work with other high-end recruiters and large tech companies. We recently hired a new employee who was a direct result of a fellow recruiter personally forwarding his résumé to me. He said, "If we had a place to put him, we'd hire him. But we don't, so you should." He automatically got an interview that quickly proceeded to a hire. -Liam Martin,Staff.com

5. Recommendations help with culture fit

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I hire great people. So when they recommend other people, I take it very seriously. Quality people tend to attract other quality people in their lives. We also hire for culture fit, and people frequently refer others with similar values. - Corey Blake, Round Table Companies

6. Referrals are the lifeblood of a startup

Personal referrals are the lifeblood of expanding any business, but especially a startup. People who start at a company as a referral know they must succeed, or they'll be hurting themselves along with the person who referred them. They automatically have a friend at a new place – someone who can show them the ropes. It's an all around win-win situation. - Andrew Schrage, Money Crashers Personal Finance

7. Data supports the power of referrals

All the data supports that referrals are the best recruitment method. Referrals are the fastest way to fill new jobs. Referrals have a longer average length of employment of all initial hires after two years (45-per-cent retention compared with 20-per-cent from job boards). Referrals are only 6.9 per cent of applicants, which means less work. What's not to like? - Brett Farmiloe, Markitors

8. Referrals are highly valued

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In the past, hiring candidates from recruiters hasn't been very successful. For that reason, personal referrals are valued heavily in our company. Because we are a fast-growth company, the majority of new employees are hired for new positions in our company. In this situation, we've found that recommendations from trusted peers and colleagues in the industry are the most suitable for the job. - Dave Smith, TekScape

9. Referrals work out well

We highly prefer personal referrals when it comes to recruiting new employees. Research and our own experience show referrals tend to work out really well. Referrals come to work on their first day usually knowing or being close to one of the other employees. That newbie feels more comfortable faster and has a much better chance of sticking around for the long term. - Michael Patak, TopstepTrader

10. Referrals are platinum

Referrals are the best way to gain insight into potential employees, bar none. I put them above all else. However, you must be careful; referrals can also be useless validations from people close to employees. It's important to discern the relationship between potential employees and their referrers. The best referrals are unsolicited or done through your own diligence. - Alec Bowers, Abraxas Solutions

TheYoung Entrepreneur Council (YEC)is an invite-only organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, YEC recently launchedStartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.